On Thursday, Toronto-Dominion Bank will release its quarterly report, and investors remain pleased with the Canadian bank, sending its shares to new all-time highs recently. But as Toronto-Dominion expands southward with its TD Bank U.S. branches, opportunities for competition with U.S. banking stalwarts Bank of America and Citigroup will become more common, and Toronto-Dominion will have to rely on its strong base in Canada, while also finding innovative ways to differentiate itself in the U.S. market.

Source: Toronto-Dominion.

Toronto-Dominion and its Canadian peers benefited from the fact that the global financial crisis in 2008 wasn't as severe north of the border as it was in the U.S., especially for Bank of America and Citigroup. But the huge drop in metals prices has hit Canada's commodity-based economy, and concerns about housing-market frothiness have made some investors question whether Toronto-Dominion's Canadian base is secure. Let's take an early look at what's been happening with Toronto-Dominion Bank during the past quarter, and what we're likely to see in its report.

Stats on Toronto-Dominion Bank

Analyst EPS Estimate

$1.02

Change From Year-Ago EPS

7.4%

Revenue Estimate

$6.80 billion

Change From Year-Ago Revenue

12.8%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Can Toronto-Dominion earnings keep growing?Analysts have grown more upbeat in recent months about Toronto-Dominion earnings, boosting April-quarter estimates and full-year fiscal 2014 projections each by $0.03 per share. The stock has kept climbing, with gains of 6% since mid-February.

Toronto-Dominion's quarterly results in February continued the bank's history of strong results. Adjusted earnings rose 6% from year-ago levels, with consistent results in both its Canadian and U.S. retail-banking segments. Wholesale-banking income was the real standout, with net income soaring 44% from a rise in trading-related revenue and various types of fee income from advisory and underwriting services. Returns on common equity stayed strong at 16.2% on an adjusted basis, and capital ratios remained healthy. Toronto-Dominion responded by boosting its dividend by 9%, paying a yield of almost 4% that puts Bank of America's and Citigroup's puny payouts to shame.

Source: Toronto-Dominion.

As much as Canada has helped Toronto-Dominion Bank stay healthy over the years, the bank's focus going forward appears to be on its U.S. business. Later this year, the current head of Toronto-Dominion's U.S. banking operations will take over as CEO of the entire company, and the bank hopes that a stronger economic recovery in the U.S. can help it boost its growth prospects and overcome any sluggishness in the Canadian economy, where loan growth appears to be moderating.

One reason for caution is that Canada's housing market is showing signs of fatigue. In areas such as Montreal, Ottawa, and Victoria, average home prices have fallen, and Toronto-Dominion is seeing pressure from other banks to offer promotional teaser rates to boost mortgage volume. If interest rates start to rise, then the heavy debt load that Canadian consumers currently have could create cash flow problems that could send the economy into a downward spiral.

Still, given the greater competition in the U.S. market, Toronto-Dominion will have to work hard to fight against lower profit margins than it's used to seeing in Canada. With major acquisitions in recent years, TD Bank has become a major player in the U.S., concentrating on the Northeast, but extending all the way down the Eastern Seaboard. With moves like building up its mobile presence with a mobile-banking center, Toronto-Dominion aims to give U.S. customers a better banking experience than Citigroup or Bank of America can offer.

In the Toronto-Dominion earnings report, watch to see how the bank does in the U.S. versus Canada. The Canadian market remains a key source of strength for Toronto-Dominion Bank, but it needs U.S. growth in order to realize its full international potential.

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